'Deep misgivings'

The sacking of Mr Pearse had an immediate effect and work on the project temporarily stalled.

RM Williams Agricultural Holdings insists the Henbury project has not been mismanaged, but at least two of the station's neighbours say they have deep misgivings about the way the station has been run, citing inadequate weed and fire control.

All bets off

When Henbury Station was purchased last year, the Federal Government had an agreement with the Northern Territory government to convert the station's pastoral lease to conservation covenant.

Northern Territory Cattlemen's Association executive director Luke Bowen says the new Country Liberal Government is opposed to the tenure change.

"They've given a fairly clear understanding prior to the election and subsequently that they wouldn't be changing land tenure until such time that the methodology and the economics behind it were shown to be sound," he said.

RM Williams Agricultural Holdings has set aside enough funding to run Henbury without income until mid next year.

The company says it hopes by then the Government will have approved a methodology for sequestering carbon on Australia's rangelands so Henbury can start trading carbon credits.

The methodology is a set of practices that landholders will have to follow to ensure that carbon is actually being taken out of the atmosphere and sequestered permanently.

A group including RM Williams Agricultural Holdings has drafted the first rangeland methodology. Even if the draft is accepted it will not be approved until mid next year at the earliest.

If Henbury fails and we can't convert it to a carbon project, then we would have to consider how we proceed, whether we exit the agreement, and we haven't had these conversations, because obviously the only way we could finance it then going forward is with cattle.

Northern Territory pastoralists are threatened by the Government’s deal to destock Henbury Station. They are deeply sceptical the carbon plan will work and see Henbury as a government vote of no confidence in the cattle industry.

"I think we need to remain very open to the fact that there still could be opportunities there.

"We just need to make sure these systems are verifiable and they have some integrity."

The station will enter uncharted territory if a rangelands methodology is not approved.

Mr Richards insists the company cannot subsidise Henbury forever.

"If Henbury fails and we can't convert it to a carbon project, then we would have to consider how we proceed, whether we exit the agreement, and we haven't had these conversations, because obviously the only way we could finance it then going forward is with cattle," he said.

Mr Richards says he was unaware the Federal Government has broad powers to take over Henbury without compensation if the company fails to meet its conservation obligations.

"I was of the opposite opinion that should we get to the end of the period and the methodology wasn't proven we have the option to retain the property," he said.